MASTER DRILLING INDIA PRIVATE LIMITED Vs. SAREL DRILL & ENGINEERING EQUIPMENT INDIA PRIVATE LIMITED

JUDGEMENT

(1.) This Petition is purported to have been filed under Sec. 34 of the Arbitration and Conciliation Act, 1996 ("the Act"). The Petition challenges an order dated May 10, 2024 ("Impugned Order") passed by the Learned Arbitral Tribunal in disposal of an Application filed by the Petitioner invoking Sec. 31(6) read with Sec. 32(2)(c) of the Act, essentially repelling the contentions of the Petitioner that the very conduct of the arbitration proceedings is untenable.

(2.) The arbitral proceedings relate to a Business Transfer Agreement dated September 3, 2018 ("Agreement") executed between the Petitioner, Master Drilling India Private Limited ("Master Drilling") and the Respondent, Sarel Drill & Engineering Equipment India Private Limited ("Sarel Drill"). In terms of the Agreement, the business and assets of Sarel Drill were sold to Master Drilling. According to Sarel Drill, the Agreement lapsed owing to conditions precedent not being met due to breach attributable to Master Drilling, which has resulted in wrongful loss being caused to Sarel Drill. Therefore, the arbitral proceedings relate to claims by Sarel Drill for Master Drilling to effect payment of damages, return of machinery and rental payments.

(3.) Master Drilling took a stand that the very invocation and pursuit of arbitral proceedings was untenable on account of Sarel Drill lacking a validly constituted Board of Directors when arbitration was invoked and when an application under Sec. 11 of the Act was filed. According to Master Drilling, without at least two directors on its Board of Directors, Sarel Drill was incapable of taking any decision to initiate and pursue the underlying arbitration proceedings.